LOGISTICS: Asia-US container rates spike as shippers avoid Red Sea after continued rebel attacks

HOUSTON (ICIS)–Rates for shipping containers from east Asia and China to the US spiked this week after rebel attacks on commercial vessels in the Red Sea led ocean carriers to avoid the waterway, lengthening shipping times and tightening capacity.

Weekly container rates to the US West Coast are up by 63% from the previous week, and rates to the East Coast are up by 55%, according to data from online freight shipping marketplace and platform provider Freightos.

Shipping consultancy Drewry’s weekly World Container Index was already starting to show increases on 21 December, as shown in the following chart.

Source: Drewry

Drewry’s next World Container Index will be released on 4 January.

Some carriers have added significant surcharges for all Asia-North America containers, and Mediterranean Shipping Co (MSC) announced general rate increases of $1,000/container from the Middle East to the US, effective 29 January.

Most carriers continued to divert vessels away from the region from mid-December, but global shipping majors Maersk and CMA CGM had resumed some Red Sea sailings as of late last week, according to Judah Levine, head of research at Freightos.

Maersk announced on 2 January that it was again pausing transits through the region after one of its vessels was attacked on 30 December.

“The longer voyages for diverted services mean longer lead times for importers and some threat of port congestion if updated schedules cannot be maintained and multiple vessels arrive at once, though so far there have not been reports of backlogs,” Levine said.

The longer lead times and possible port congestion could be offset by the excess capacity carriers were dealing with prior to the Red Sea disruptions.

“The excess capacity that carriers were contending with before the Red Sea disruptions will now be activated to use more ships than usual per service to try and keep up with departure schedules and keep containers moving,” Levine said.

Rate increases to the West Coast could also be because of anticipated shifts of volumes to the West Coast amid efforts to avoid the increased transit times to the East Coast.

Levine said that some carriers are shortening the amount of time they allow import containers to sit at destination ports amid efforts to speed up the return of empty containers and avoid equipment shortages at Asian origin ports, as empty containers will now take longer to get back to export hubs.

Container ships and costs for shipping containers are relevant to the chemical industry because while most chemicals are liquids and are shipped in tankers, container ships transport polymers, such as polyethylene (PE) and polypropylene (PP), which are shipped in pellets.

Thumbnail image shows a ship crossing the Suez Canal toward the Red Sea in late December 2023  (Source: Mohamed Hossam/EPA-EFE/Shutterstock)